Single Mother Successfully Proves “Undue Hardship” in Student Loan Discharge Case

By: Emily R. Fisher

St. John’s University School of Law

American Bankruptcy Institute Law Review Staff


A debtor generally cannot discharge student loan debt absent a showing of “undue hardship.” Section 528(a)(8) of title 11 of the United States Code (“Bankruptcy Code”) provides that a bankruptcy discharge does not apply to student loans unless excepting student loans from discharge “would impose an undue hardship on the debtor and the debtor’s dependents[.]”[1] On April 15, 2020, the United States Bankruptcy Court for the Northern District of Texas found that a 47 year-old single mother, who was the caretaker of her two disabled daughters, had satisfied the demanding standard that her student loans were an “undue hardship.”[2] The case, In re Trejo, is one of the rare instances where the debtor prevailed to have her student loans discharged.[3]

In 2008, Ms. Trejo obtained a loan to attend community college in Texas, and despite attending for six years, she never earned a degree.[4] In 2015, Ms. Trejo borrowed an additional $13,522 to help her daughter pay for tuition.[5] In June 2017, facing $90,598.80 in student loan debt, Ms. Trejo filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code.[6] She also filed a complaint against the United States Department of Education and Navient Solutions, LLC (“Navient”), seeking a discharge of her federal student loans on the basis that exempting the loans from discharge would impose an undue hardship.[7]

To evaluate “undue hardship” claims, the Fifth Circuit, which includes Texas, expressly adopted the three-prong test established by the United States Court of Appeals for the Second Circuit in Brunner v. New York State Higher Education Services Corporation.[8] Under the Brunner test, a debtor seeking discharge must prove:

“(1) That the debtor cannot maintain, based on current income and expenses, a ‘minimal’ standard of living for [herself] and [her] dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.[9]

The Fifth Circuit has concluded that where a debtor’s expenses exceed her income, Brunner’s first prong has been satisfied.[10] In this case, the Department of Education argued that Ms. Trejo did not meet the “minimum standards of living” because she received a discretionary income each month.[11] However, the bankruptcy court found no realistic “belt-tightening” that Ms. Trejo could achieve to create discretionary income to repay the student loans.[12] Due to her daughters’ worsening medical condition, Ms. Trejo could no longer hold even a part-time job. [13] Each month, she struggled to pay the meager expenses for her family of three.[14] As the bankruptcy court concluded, Ms. Trejo would be unable to maintain a “minimal standard” of living if she were forced to repay her loans. [15] Therefore, Ms. Trejo had satisfied the first prong of Brunner.[16]

The second prong of Brunner requires that a debtor demonstrate “additional circumstances” that indicate the debtor’s condition “is likely to persist for a significant portion of the repayment period of the student loans.”[17] The bankruptcy court analyzed whether Ms. Trejo possessed a “total incapacity” to pay future debts “for reasons not within [her] control.”[18] Ms. Trejo did not choose unemployment. [19] Rather, Ms. Trejo was in the untenable position of seeking employment due to her daughters’ medical conditions, her unconverted lack of job experience or skills, and her severely limited education. [20] Based on these factors, the bankruptcy court found that Ms. Trejo’s financial position was likely to persist for a significant portion of the repayment period. [21] Therefore, Ms. Trejo had satisfied the second prong of Brunner.[22]

Finally, Brunner’s third prong requires the debtor to show they made good-faith efforts to repay the loans.[23] In cases where, as here, the debtor does not have funds available to make payments, the court looks to whether the debtor pursued forbearance, deferment, or otherwise attempted to address the loans.[24] The Department of Education argued that these were only short-term solutions and that Ms. Trejo failed to seek any long-term solutions to satisfy the good-faith standard. [25] Although Ms. Trejo had not made any payments on her student loan debt, the uncontroverted evidence established that, over the years, she had made numerous phone calls to her student loan lenders and successfully obtained several payment “deferrals” and “forbearances” on her student loans. [26] For these reasons, the bankruptcy court concluded that Ms. Trejo had satisfied the demanding standard adopted by the Fifth Circuit when considering the third prong of the Brunner test. [27]

Frequently, courts interpret the requirement that a debtor show “undue hardship” as a high bar.[28] As a result, debtors rarely attempt a discharge action, and very few succeed. Here, having found that all necessary elements of Brunner had been met, the bankruptcy court granted a discharge of Ms. Trejo’s student loans.[29] The court’s ruling may be a shift toward a slightly more permissive judicial review of the § 523(a)(8) “undue hardship” standard.[30] Implicit in the court’s holding is the reality that every bankruptcy case presents a different balancing act, and strict adherence to the Brunner test is not always in the best interest of the debtor or society.


[1] 11 U.S.C. § 523(a)(8).

[2] Trejo v. Navient (In re Trejo), No. 17-4052, 2020 WL 1884444, at *1, 2020 Bankr. LEXIS 1030, at *24 (Bankr. N.D. Tex. April 15, 2020).

[3] In re Trejo, No. 17-4052, 2020 WL 1884444 at *10.

[4] Id.

[5] Id.

[6] Id. at *10.

[7] Id.

[8] Id. at *5; see Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2d Cir. 1987).

[9] Brunner, 831 F.2d at 396.

[10] In re Trejo, No. 17-4052, 2020 WL 1884444 at *6.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Brunner, 831 F.2d at 396.

[18] In re Trejo, No. 17-4052, 2020 WL 1884444 at *7.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id. at *9.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] See In re Thomas, 931 F.3d 449 (5th Cir. 2019); U.S. Dept. of Education v. Gerhardt, 348 F.2d 89 (5th Cir. 2003); see also Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395 (2d Cir. 1987).

[29] Id. at *1.

[30] 11 U.S.C. § 523(a)(8).